The government has published a series of tax documents and consultations in a move to strengthen policymaking and help create a more trusted, simple and modern tax system.

More than 30 policy updates, consultations and documents that would traditionally be published at Budget have been released as part of the ‘Tax policies and consultations update (Spring 2021)’ – allowing more space for scrutiny from stakeholders.

The government is today publishing:

  • A call for evidence on the tax administration framework, to create a trusted, modern tax administration system that is simpler, easier to navigate, and meets the needs of taxpayers.
  • A consultation on potential changes to Air Passenger Duty that could improve connections across the Union and regions by cutting the tax on domestic flights. The consultation also seeks views on supporting the UK’s commitment to net zero emissions by 2050 by increasing the number of international distance bands. This would reinforce the “polluter pays principle”, by ensuring that those who travel furthest internationally, and consequently have the greatest impact on the environment, incur the most duty.
  • An interim report on the government’s Fundamental Review of Business Rates, which sets out a summary of responses to last year’s call for evidence. The final report will be published in the Autumn.

Also as part of the release, the government has announced it will legislate to tighten tax rules for second property owners meaning they can only register for business rates if their properties are genuine holiday lets.

In England, many holiday lets are liable to pay business rates, rather than council tax, when an owner declares that they intend to let their property in the next year. They may also be able to claim rates relief of up to 100%. The change announced today will ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little or no realistic effort to actually let it out.

More specifically on second home tax changes:

  • In England, a holiday let is currently liable to pay business rates rather than council tax when the owner declares they intend to make their property available to let 140 days in the coming year. There is no requirement for business rates purposes to undertake checks to verify that they are actually commercially rented out.
  • Of the over 60,000 holiday lets currently on the business rates list, around 96% have a rateable value which would likely qualify them for Small Business Rates Relief and as a result pay no business rates at all.
  • The new criteria will ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little or no realistic effort to actually let it out.
  • Further details of the change and implementation will be included in a MHCLG response to the consultation on the business rates treatment of self-catering accommodation which will be published shortly.

Today’s update will also cut inheritance tax red tape for more than 200,000 estates every year, dramatically reducing the amount of paperwork many families fill out. Over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms when probate or confirmation is required from 1 January 2022.

None of today’s announcements will have any impact on the government’s finances or require legislation in the current Finance Bill.

Many of today’s announcements form a key part of the government’s wider ten-year plan to build a trusted, modern tax system. The plan, published in July 2020, sets out a strategy to improve the resilience and effectiveness of the country’s tax administration system over the next decade. Consultations and calls for evidence published today help deliver this by:

  • clamping down on promoters of tax avoidance schemes
  • considering whether tax advisers should be required to hold professional indemnity insurance to help raise standards
  • beginning to explore whether the current timing and frequency of tax payments are appropriate

“The government is also seeking views through a call for evidence on how the legislation underpinning HMRC’s administration of the tax system could be updated to make the tax system easier to deal with and help make tax more straightforward for taxpayers, and also help build greater resilience and capacity to respond to future crises,” Financial Secretary to the Treasury Jesse Norman said.

Anita Monteith, Institute of Chartered Accountants in England and Wales Tax Faculty Technical Manager, aptly remarked: “Tax consultations were often lost in the crowd of announcements on Budget Day, so the move to publish them separately will give the proposals more focus and emphasise the government’s commitment to sincere and open discussions on the future of tax.”

For a full list of announcements please see the Command Paper.

Share this article:

Related Posts

Linda Casey has over 10 year work experience in accounting and covers UK news on audit, accounting and taxation.


We use cookies to personalise and enhance your experience on our site. By clicking "Accept" and continuing to use the site, you agree to the use of cookies as set out in our Privacy Policy and Cookie Policy. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below, then you are consenting to this. Visit our Cookie Policy and Privacy Policy for more information on our data collection practices.